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Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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PJ/Case Law/2020-2021/3641

Whether the valuation done in case of contemporaneous import in different contracts can be different?
Mosaic India Private Limited vs CC Jamnagar [Final Order No A/ 11113/ 2020]
Brief Facts: - The Appellant is engaged in import of certain goods from its related overseas party in the United States. Price of the impugned goods widely fluctuates, due to macro-economic factors. Import transaction between importer and its overseas related party was evaluated by the Special Valuation Branch and after examination, it was ruled in June 2006 that contracted price reflects arm’s length consideration. In December 2007, appellant contracted with overseas supplier for import of two consignments of diammonium phosphate. Price agreed for the consignment was the same and goods were destined to arrive in March 2008 (approx. $650). While the goods were in high seas, the international price of the subject goods spiked considerably, and Appellant sold goods contained in consignment 2 to its overseas group company in Hong Kong in March 2008 (for approx. $ 960). Subsequently, Hong Kong entity sold the subject goods to Tata Chemicals Limited in March 2008 (for approx. $ 960). Both the above transactions were undertaken at high seas. Consignment 1 as well as consignment 2 arrived in India in April 2008 and were custom cleared by Appellant and Tata Chemicals respectively.
Issue: - Whether the valuation done in case of contemporaneous import in different contracts can be different?
Reasoning of the Judgement: -On observing wide difference in import value declared by Appellant (approx. $ 650) and Tata Chemicals Limited (approx. $ 960), a show cause notice was issued to Appellant on allegation of under-valuing the imported goods. Price agreed is as per international standard prevalent during the relevant times. Supreme Court has held in various rulings that different prices for the same commodity contracted under different contracts entered at different points of time is acceptable, even though the goods are imported on the same date. Department argued that the Special Valuation Branch report is not applicable since the same is conditional upon availability of contemporaneous imports, which is in the instant case is available.
Held: -Hon’ble CESTAT held that since transaction value has already been examined by Special valuation Branch, import value thereof should be accepted in terms of Rule 3(3)(a) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007  .Although contemporaneous imports are at higher price, the examination of the circumstances indicate that relationship between Appellant and its supplier has not influenced the price.  CESTAT observed that there is cogent difference in assessable value on account of price fluctuation and different date of contract execution by importers. Basis the above, transaction value was accepted and allegation of under-valuing import was set aside.
Comment: - Even if contemporaneous imports are at higher price, the price fluctuation depends on various economic factors and to prove them the supporting documentation would assist in defending the declared assessable value.
Prepared By: CA. Kartik Singhvi
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